Despite the challenging economic environment in 2015, Malaysia’s GDP grew by 5% as reflected in the upward growth of domestic demand. This is reflected in domestic consumption prior to the implementation of the Goods and Services Tax (GST) on 1st April 2015. Stable market conditions enabled private consumption to grow by 3% in Q2 followed by 1% in Q3.
In comparison, the first half of 2016, Malaysia’s GDP was at a 4.05% (y-o-y) and grew to 4.15% (y-o-y) by the Q3. The slow economic growth can be attributed to weakened investor confidence due to the state investment fund 1Malaysia Development Berhad (1MDB) allegations faced by Malaysia’s governing leader. Inflation continued to moderate as the base effect of the GST implementation from 2015 gradually diminished. As of October 2016, headline inflation stood at 1.4% with no indication of recurring effects.
In 2015, labor market conditions remained stable overall due to the sustained expansion across all economic sectors. In the second half of 2015, the unemployment rate edged higher to 3.2% as more cautious business sentiments led to lower employment prospects. By 2016, the unemployment rate had risen to 3.5% in Q3 – above the average of 3.1%. Concurrently, the labor force participation rate fell from 67.8% in July 2016 to 67.6% in September 2016. The rise of the unemployment rate can be attributed to the increased rate of new entrants into the labor force relative to the rate of job creation. Businesses also began to show a more cautious approach to hiring as indicative of the declining trend in job vacancies. Hence, the growth of the labor force has exceeded the growth of employment.
The pick up in the economy can be attributed to evolving trends in the job market landscape. 2017, is expected to be a disruptive year in HR as we companies moving away from traditional HR models towards building Centers of Excellence (CoE). As February 2017, there are 14.9 million people in the workforce. 14.4 million of Malaysians are employed while 514,800 Malaysians remain unemployed compared to February 2016 of 506,400 unemployed Malaysians. Slow growth in the economy has contributed to slow salary increments and a declining trend in job vacancies. However, as companies are looking to move their regional hubs to within the Asia region; there is expected to be an increase not only in the growth rate but also in the number of jobs available.
HR departments of mid-market companies now have more access to affordable HR software that will increase efficiency and effectiveness. Moreover, introduction and implementation of digital free trade zones and digital hubs, means more opportunities for job creation.
The key drivers of employee engagement are rapport and trust in leadership as well as pride in working for the company. Many companies fall short in creating workplace engagement. This is where employee experience comes into play – beginning from recruitment to onboarding, growth and finally offboarding. Onboarding is a crucial part of the process, as it ensures new hires are instilled with company values and are offered adequate roadmaps.
Younger generations are seeking more effective mentorship from senior managements and seek more effective collaborations in the work place – placing importance on creating a strong company culture in order to retain high performers and improving attrition rates. Thus, WATERMARK collaborates with companies to create an effective recruitment process will result in more enthusiastic, inspired, empowered and confident employees that will grow with the company.
Global Business Services (GBS) – previously Shared Services Outsourcing (SSO) integrates services that utilize ICT, Finance, Accounting, Services, HR and Engineering Design. It centralizes work, governance and business practices into a single entity for the purpose of scalability, cost efficiency and optimized processes. The key activities of GBS are:
USD $240 billion with Malaysia worth US $4 billion. It is expected that over the next few years, four markets – Malaysia, Singapore, India and South Korea will experience a compounded annual growth rate of 10-15% over the next four years. As of 2015, Malaysia has over 450 GBS firms. In 2016, GBS created 6,000 jobs leading to a total of 85,000.
This has changed the way business organizations operate leading to a change in the job landscape. Government agency, Malaysia Digital Economy Corporation (MDEC) has worked to drive GBS into the next phase of development and accordingly, move Malaysia up on the value chain. International Data Corp (IDC) conducted a study that shows various policies have been crafted, government incentives, modern infrastructure access, skilled talent pool and resources, as well as guaranteed support for the growth of the GBS sector are among the key reasons that makes Malaysia a potential regional hub.
Malaysia’s existing strengths will be used as leverage for growth to develop a high value based GBS sector. KPO type activities and services contribute to the talent ecosystem and encourage new investments and development in niche areas.
The Technical Education and Vocational Training (TEVT) transformation is expected to benefit 58% of workers through the PSMB Act that will increase from 1.77 million in 2014 to 2.8 million by 2020 – strengthening lifelong learning for skill development. The 11th Malaysia Plan shows a 3.7% average annual growth rate of labor productivity compared to 2.6% in the 10th Malaysia Plan. The industry specific Graduate Employability Management Scheme for Shared Services and Oursourcing (GEMS-SSO), is aimed at providing industry centric training to final year undergraduates from local universities to increase their employability as recognized Certified Outsourcing Specialist (COS).
WATERMARK works collaboratively with local academic institutes to offer a platform for young Malaysia access to job opportunities as they embark on their career pathways with filling up demanding gap each year (new graduates) for matched vacancies each year quarterly by the corporation.